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Valued at a market cap of $34.7 billion, Arch Capital Group Ltd. (ACGL) offers insurance, reinsurance, and mortgage insurance products. The Pembroke, Bermuda-based company provides various products and services covering primary & excess casualty, professional indemnity, workers compensation & umbrella & employers’ liability insurance, to name a few.
Companies valued at $10 billion or more are typically classified as “large-cap stocks,” and Arch Capital fits the label perfectly, with its market cap exceeding this threshold. The company is known for its disciplined underwriting and strong risk management capabilities. Its expertise in catastrophe risk management and its ability to adapt to market trends have contributed to its consistent financial performance. Backed by a solid capital base and a commitment to innovation, Arch Capital continues to expand its market share, reinforcing its leadership in the global insurance and reinsurance industry.
This insurance company has slipped 18.2% from its 52-week high of $116.47, reached on Oct. 7. However, ACGL stock has soared nearly 5.3% over the past three months, outpacing the SPDR S&P Insurance ETF’s (KIE) 4.3% rally over the same time frame.
However, in the longer term, ACGL has gained 3.7% over the past 52 weeks, considerably underperforming KIE’s 18.2% rise. Moreover, on a YTD basis, shares of Arch Capital are up 3.2%, compared to KIE’s 6.2% gain.
ACGL’s momentum gained traction in mid-March, breaking above its 50-day moving average - a bullish signal. Yet, the stock remains below its 200-day moving average since late November 2024, keeping investors watching for a decisive move to confirm sustained strength.
On Feb. 10, Arch Capital reported its Q4 earnings results, but despite exceeding expectations, its stock declined 2% in the subsequent trading session. The company posted adjusted earnings of $2.26 per share and revenue of nearly $4.6 billion. Additionally, net premiums written grew by 17.1% year over year, reflecting strong business momentum.
However, on the downside, net income declined by 9.2% annually, and underwriting income dropped 12.6%, largely due to catastrophe-related losses, which may have impacted investor sentiment. The company also estimated its exposure to California wildfire-related losses to be between $450 million and $550 million, further contributing to concerns about future profitability.
Arch Capital has underperformed its rival, American International Group, Inc. (AIG), which gained 10% over the past 52 weeks and almost 15.3% on a YTD basis.
Analysts remain moderately optimistic about ACGL’s prospects. The stock has a consensus rating of “Moderate Buy” from the 17 analysts covering it, and the mean price target of $113.38 suggests 19% premium to its current levels.
